44 Cards in this Set

Choice between a local-responsiveness or global approach to a multinational’s strategies

Global-local dilemma

What are the four broad multinational strategies?

-International
-Multidomestic
-Regional
-Transnational

selling global products and using similar marketing techniques worldwide
- A compromise approach
- Limited adjustment in product offerings and marketing strategies
- Upstream and support activities remain concentrated at home country

International strategy

• The company attempts to offer products or services that attract customers by closely satisfying their cultural needs and expectations
• Emphasizing local-responsiveness issues
- Ex.: different packages, colors
- Costs more to produce, need to charge higher prices to recoup
- A form of the differentiation strategy
- Not limited to large multinationals

Dispersing value-chain activities anywhere in the world where they can be done best or cheapest

Transnational Strategy
-Location advantages

Country location where a firm can better perform some of its value-chain activities

Transnational strategy
-Global platform

With upstream location advantages, the transnational can:

- Locate subunits near cheap sources of high-quality raw material
- Locate subunits near centers of research and innovation
- Locate subunits near sources of high-quality or low-cost labor
- Seek low-cost financing anywhere in the world
- Share discoveries and innovations made in one part of the world with operations in other parts of the world

Conditions in a industry that favor transnational or international strategies

Globalization drivers

What are the four categories of global drivers?

Markets, costs, governments, and competition

• Are there common customer needs?
• Are there global customers?
• Can you transfer marketing?

Global Markets

• Are there global economies of scale?
• Are there global sources of low-cost raw materials?
• Are there cheaper sources of highly skilled labor?
• Are product-development costs high?

Costs

• Do the targeted countries have favorable trade policies?
• Do the target countries have regulations that restrict operations?

Governments

• What strategies do your competitors use?
• What is the volume of imports and exports in the industry?

The Competition

The choice of how to enter each international market

Also what are the four strategies?

Participation strategies:

-Exporting
-Licensing
-Strategic alliances
-Foreign direct investment

Company that treats and fills overseas orders like domestic orders

Passive exporter

Uses intermediaries or go-between firms

Indirect exporting

What are the most common intermediaries for export strategies?

Export Management Company (EMC) and Export Trading Company (ETC)

•Specialize in products, countries, or regions

•Provide ready-made access to markets

•Have networks of foreign distributors

Direct contact with customers in the foreign market

•More aggressive exporting strategy

•Requires more contact with foreign companies

•Uses foreign sales representatives, distributors, or retailers

•May require branch offices in foreign countries

Direct exporting

Contractual agreement between a domestic licensor and a foreign licensee

•Licenser has valuable patent, know-how, or trademark

•Foreign licensee pays royalties for use

Licensing

The franchisor grants the use of a whole business operation

International franchising

Production following the foreign companies’ specifications

Contract manufacturing

Multinational company makes a project fully operational before the foreign owner takes control

Turnkey operation

•Cooperative agreements between firms from different countries to participate in business activities

•May include any value-chain activity

International strategic alliance

Two or more firms from different countries have an equity position in a separate company

Equity International Joint Venture

Two or more firms from different countries agree to cooperate in any value-chain activity

International Cooperative Alliance

What are the two types of international strategic alliances?

Equity International Joint Ventures and International Cooperative Alliance

• Companies own and control directly a foreign operation
- Symbolizes the highest stage of internationalization

Foreign Direct Investment

Starting foreign operations from scratch

Greenfield investments

In formulating participation strategies, one must take into account what THREE issues?

-Basic functions of each participation strategy

-Strategic considerations and intent of company

-How best to support company’s multinational strategy

_________ is the easiest and cheapest participation strategy, although it may not always be the most profitable

•It is a way to begin to internationalize or t test new markets

Exporting

Does management need to control sales, customer credit, and sale of the product?

• - If yes, choose direct exporting
• Does company have resources to manage export operations?
• - If not, use indirect exporting

Does company have resources to design/execute international promotional activities?

• - If not, use foreign intermediaries and indirect exporting

• Does company have resources to support extensive international travel or possibly an expatriate sales
force?

- If so, choose direct exporting

The licensing decision is based on what three factors?

-Characteristics of the products

•Best products are older or soon-to-be replaced
-Characteristics of the target country